Connecticut Attorney General's Office

Press Release

March 2, 2010

         Attorney General Richard Blumenthal announced that -- following his recent agreement with Anthem Blue Cross and Blue Shield (Anthem) -- there is now a hospital from every county in the state participating in the state’s Charter Oak Health Plan for the uninsured.

Since reaching agreement with Anthem in late January, three hospitals critical to strengthening the program for the uninsured -- Windham Hospital, Day Kimball Healthcare and Middlesex Hospital -- have agreed to join the Charter Oak plan.

Earlier this year, only 17 of the 32 hospitals in Connecticut had executed agreements to participate with Charter Oak insurers, with no hospitals in Windham and Middlesex counties participating.

Blumenthal raised concerns late last year about clauses in Anthem’s contracts with many Connecticut hospitals that threatened to deter them from participating in Charter Oak. The clauses, commonly called “Most Favored Nations” (MFN) clauses, require hospitals to provide Anthem with discounts at least as favorable as any provided to its competitors.

In an agreement last month, Anthem is waiving this clause for Charter Oak, enabling hospitals to freely accept Charter Oak without fear of financial repercussions from Anthem for breach of contract.

“This recent expansion -- directly resulting from our agreement with Anthem -- bolsters the success of Charter Oak and its mission to provide coverage to thousands of uninsured citizens in Connecticut,” Blumenthal said. “Our agreement with Anthem has enabled hospitals to freely accept Charter Oak without fear of financial repercussions from Anthem for breach of contract.

“I again commend Anthem for reaching an agreement with our office to ensure the success of Charter Oak -- which is critical now more than ever as the ranks of uninsured grow during this economic downturn. This growing number of hospitals participating in Charter Oak further solidifies the success of this program by ensuring a participating hospital in every Connecticut county.”

Charter Oak is administered by the Connecticut Department of Social Services. As part of its plan to provide coverage to the uninsured, the state contracted with three private health insurers -- Aetna Better Health, AmeriChoice by UnitedHealthcare, and Community Health Network of Connecticut -- to coordinate benefits in a managed care program and establish provider networks for health professionals and hospitals.

Under Charter Oak, hospitals that agree to participate must accept discounted rates for services and treatment provided to Charter Oak members that are much steeper than the rates hospitals generally accepted for their commercial business. Lower payment rates than those paid by commercial insurers are the norm in publicly-subsidized health care programs.

Blumenthal said some hospitals delayed or refused to participate out of concern that Anthem may seek to enforce its MFN rights for any hospital that participates in Charter Oak. Although Anthem never enforced its MFN clause with respect to Charter Oak, the waiver eliminated this concern.

The rate of reimbursement to hospitals under Charter Oak is considerably less than the rates hospitals charge Anthem for its commercial plan members. If a hospital did participate in Charter Oak, and if Anthem applied the MFN clause to Charter Oak, the hospital would be exposed to considerable financial penalty as it would have to offer Anthem the same rates or discounts the hospital agreed to with Charter Oak.

Since Anthem is invariably a hospital's largest commercial payer, the loss of revenue to that hospital if that were to occur would be a significant financial detriment to the hospital and a deterrent to participating in Charter Oak.

Blumenthal commended Anthem for its continued cooperation in his ongoing antitrust investigation.

The Anthem investigation is being conducted by Assistant Attorneys General Rachel Davis and Laura Martella of the Attorney General's Antitrust Department.